Rurban Financial Corp. in Defiance, Ohio, announced late Monday that it had completed the sale of $8.4 million of troubled loans for 84.6% of their book value.
It said it would take a pretax loss of $1.45 million this quarter as a result of the sale.
Rurban, the $418 million-asset holding company for State Bank and Trust Co., is barred from naming the buyers. A Rurban spokeswoman said the loans were divided into eight different portfolios and bought by six different buyers.
Even after the sale, Rurban's portfolio has $4.4 million of nonperforming loans.
In 2002 state and federal regulators ordered Rurban to improve risk management and clean up its loan portfolio after it was discovered that some of its loans were not fully collateralized. The order was lifted in February.
"This loan sale is an important step in the ultimate resolution of events that surfaced in 2002 and have been a drain on earnings since that time," Rurban president and chief executive Kenneth Joyce said in a press release.
Rurban reported net income of $553,000 and $577,000 for last year's fourth quarter. Its return on assets through the first nine months of 2005 was 0.48% and its return on equity 5.1%, both well below industry averages for companies its size.
